Justice Department to Begin Review of Music Licensing

The U.S. Justice Department will review its decades-old consent decrees

In a report by the New York Times -- The Music industry could be seeing the first steps towards a dramatic change in how licensing agreements take place.

On Wednesday, the Justice Department plans to announce that it will review the 73-year-old regulatory agreements that govern Ascap and BMI, two groups that act as licensing clearinghouses for a range of outlets that use music, including radio stations, websites and even restaurants and doctors’ offices. Billions of dollars in royalties are at stake, and the lobbying fight that is very likely to unfold would pit Silicon Valley giants like Pandora and Google against music companies and songwriter groups.

The music licensing system is decades old, but the review, announced by the Department’s Antitrust Division this week, comes after seismic changes to the music industry following the tech revolution, the iphones and technology that has radically altered the business.

The department said it has opened a review of its consent decrees governing music licensing groups that collect royalties from the use of their members' songs and compositions on radio, television and Internet services -- rules that have been in place since the days of Glenn Miller, Jimmy Dorsey and Billie Holiday.

Licensing groups ASCAP and BMI, also known as performing rights organizations, and publishers including Sony/ATV and Universal Music Publishing Group argue that the consent decrees entered in 1941 are out of date in the era of streaming music.

The publishers, songwriters and rights organizations have long fought for higher royalty rates for uses of their songs and compositions on Internet services such as Pandora. They have said the consent decrees undermine their position.

"The Department understands that ASCAP, BMI and some other firms in the music industry believe that the Consent Decrees need to be modified to account for changes in how music is delivered to and experienced by listeners," the department said.

ASCAP president and chairman Paul Williams cheered the department's review, saying its agreement hasn't been modified since the introduction of the iPod.

"New technologies have dramatically transformed the way people listen to music," Williams said in a statement. "The system for determining how songwriters and composers are compensated has not kept pace, making it increasingly difficult for music creators to earn a living."

As part of the review, the Justice Department has invited comment from parties, including songwriters, composers, publishers, licensees and service providers, until Aug. 6.